Section 80GG of the Income Tax Act, 1961 provides tax deductions for rent paid for individuals who do not receive house rent allowance (HRA). To be eligible for deduction under Section 80GG, the individual has to reside in a rented property.
This post provides all the details about Section 80GG – eligibility, how to claim tax deduction, how to file Form 10BA without any error and when you cannot claim tax deduction under Section 80GG. Read on!
Individuals need to fulfil the following conditions to be eligible for house rent deduction as per Sec 80GG of the income tax act:
Property owners are eligible for this tax rebate.
However, they must make sure to fulfil the following criteria:
Taxpayers need to file Form 10BA correctly to claim the deduction.
One can get access to this form and submit it conveniently by visiting the e-filing portal of the Income-tax Department. Here’s how they can do it:
Step 1: Visit the e-Filing Portal of the Income Tax Department.
Step 2: Navigate to e-File and click on Income Tax Forms.
Step 3: Select the correct form and assessment year.
Step 4: Enter all the relevant information, for example, the amount of rent paid, the name of the property owner, etc.
Step 5: Click on preview and submit.
As per provisions of the Income Tax Act, 1961, individuals can claim the least amount of the following as a tax deduction in relation to the rent paid:
Here’s an example to calculate & understand the 80GG deduction limit:
Suppose Ravi earns Rs. 5 lakh yearly and does not get HRA from his employer. His monthly rent is Rs. 15,000 or Rs. 1,80,000 annually.
Now let us consider the three conditions to find out what amount will be applicable as a tax deduction.
Lastly, the amount would be Rs. 1,30,000 (Rs. 1,80,000 – Rs. 50,000).
Since the least amount of these three will be applicable for a tax deduction, Ravi can claim Rs. 60,000 only as tax rebate under Section 80GG of Income Tax Act 1961.
Make sure to enter the following information correctly before submitting Form 10BA:
Please note that if any individual pays a rent of over Rs.1 lakh in a year, he/she has to submit a copy of the home owner’s PAN card to be eligible for the tax rebate.
You cannot claim tax deduction benefits under Section 80GG if you live in one city but have a house in another. Your owned property will be considered as rented out. Also, if you are claiming the benefit of a self-occupied house in another location.
By taking note of the information in relation to Section 80GG, individuals will be able to claim a deduction for the rent paid. Accordingly, they can reduce their tax liability and maximize their net income for a financial year.
Ans: Yes, individuals can claim a deduction in this case under Section 80GG. However, they’ll have to enter into a rental agreement with their parents and pay them at least Rs. 60,000 yearly. Nevertheless, note that the parents who’ll be receiving the money will have to show it as income when they file their tax returns.
Ans: Yes, pensioners will be eligible for a tax rebate as they do not receive HRA.
Ans: To claim a tax deduction in relation to the rent paid, it is mandatory for individuals to file Form 10BA, which consists of all details concerning the rent payment.
Ans: No, a taxpayer will not be able to claim tax benefits under both these sections of the Income Tax Act.
Ans: Yes, a taxpayer is eligible for the tax rebate even if they claim a tax deduction under Section 44ADA.
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